McDonald's misrepresented executive compensation, suit alleges

Ex-employee claims she was fired for blowing whistle; company calls allegations baseless

March 31, 2009|By Mike Hughlett, TRIBUNE REPORTER

A former McDonald's employee has sued the company for allegedly misrepresenting executive compensation information in its 2007 proxy statement.

Lisa Bridges, McDonald's former senior director of compensation, also said she was terminated for bringing up the alleged misrepresentations. The termination, she claims, is a violation the Sarbanes-Oxley Act's whistle-blower protections.

Oak Brook-based McDonald's "isolated, ostracized and ultimately terminated plaintiff Bridges for her 'straight talk' and 'choosing the right path'" after she refused to certify the accuracy of some executive compensation disclosures, the lawsuit claims.

In a statement, McDonald's said: "This case has absolutely no merit and the claims are baseless. We will vigorously defend against these claims and we remain confident that the court will rule in our favor."

Bridges, who was hired by McDonald's in February 2006, was responsible for "subcertifying" compensation-related disclosures in the company's annual proxy statement, according to a complaint filed Friday in U.S. District Court for Northern Illinois. She is seeking compensatory damages for injury to her reputation, well-being and career, among other things.

Bridges claims that McDonald's should have -- but didn't -- disclose that it had paid for two country club memberships worth nearly $3,000 for Tim Fenton, president of the company's Asian operations.

She also claims McDonald's misrepresented some of the $97,384 it paid for "home leave" trips for Asia-based Fenton and his family.

Amid other allegations, Bridges said McDonald's mischaracterized payments made to former President Mike Roberts, who was ousted in 2006. She claims McDonald's "disguised" more than $10 million it paid to Roberts as salary and incentive compensation, acting as if he was a "transitional employee," even though he'd been terminated and was no longer providing services.

Bridges said she brought up these issues internally, as well as a complaint that McDonald's severance policies were "too vague" and "not sufficiently transparent" regarding "gross-up tax benefits." A gross-up occurs when a company pays taxes on a payment or perk to an executive.

In the suit, Bridges said she was terminated on April 6, 2007, a day before McDonald's 2007 proxy statement was published.